Home Daily Commentaries New Zealand dollar trades below US$0.60

New Zealand dollar trades below US$0.60

Daily Currency Update

The Kiwi dollar is slightly weaker this morning when valued against the Greenback. The Kiwi dollar initially rose above 61 US cents following the reported mixed US Nonfarm Payroll figures and strong PMI figures, but reversed course in line with the recovery in the US dollar. The kiwi settled near 0.5950 into the weekly close.

Still, the NZD/USD pair will record a weekly 0.70% increase. No relevant data was released on the Kiwi’s side. On the technical side, we now see support for the Kiwi dollar around 0.5900, and resistance levels at 0.5967 (20-day SMA). The NZD/USD pair is correctly trading at 0.5913 at the time of writing.

On the local data front on Monday, we will see the release of the Quarterly Overseas Trade Index which calculates the volume of imports that can be purchased with an equal volume of exports. On Tuesday we will see the release of the Australia and New Zealand Banking Group (ANZ) monthly Commodity Prices Index, which measures the average price of the nation's main commodity exports that are sampled on the global market and then compared to the previous sampling.

On Thursday Statistics New Zealand will release the Quarterly Manufacturing Sales.

Key Movers

The US dollar strengthened on Friday against its major counterparts after the release of mixed Nonfarm Payroll figures and strong PMI figures. The Nonfarm Payroll report, which measures the employment change in non-agricultural business, showed that the US added 187,000 jobs in August, a tick higher than the 170,000 expected and from the previous downwardly revised 157,000.

On the negative side, Average Hourly Earnings increased, but slower than expected, while the unemployment rate rose to 3.8% in the same month. The ISM manufacturing index rose to 47.6 from 46.4 in August, close to consensus estimates of 47.0. The headline index has been stable at depressed levels during 2023 as the sector is impacted by higher interest rates and a slow economic recovery in China.

In the UK, the GBP slumped late in the New York session versus the Greenback as US Treasury bond yields rose and bolstered the USD, which is set to print its seventh consecutive week printing gains. The GBP/USD hit a daily high of 1.2712 before reversing its course and diving toward the current exchange rate, trading at around 1.2590.

Earlier data in the UK showed that British business activity remained in contractionary territory, dropping for six consecutive months below the 50 threshold, as revealed by the S&P Global/CIPS Manufacturing PMI, coming at 43.0 from 45.3 in July. That makes the case for a Bank of England (BoE) pause on its tightening cycle, but inflation remains close to 7%. Nevertheless, traders foresee a 25 bps rate increase in the upcoming meeting.

Expected Ranges

  • NZD/USD: 0.5825 - 0.6025 ▼
  • NZD/EUR: 0.5400 - 0.5600 ▼
  • GBP/NZD: 2.1000 - 2.1200 ▲
  • NZD/AUD: 1.0700 - 1.0900 ▼
  • NZD/CAD: 0.7950 - 0.8150 ▼